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Drew Westen Nails It Again

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Dr. Drew Westen is a Professor of Psychology and Psychiatry at Emory University.  After receiving his Bachelor of Arts degree at Harvard, Westen picked up a Master’s in Social and Political Thought from the University of Sussex in England.  He earned his PhD in Clinical Psychology at the University of Michigan.

In 2007, Dr. Westen wrote a book entitled, The Political BrainHere’s how the book was described by the publisher, PublicAffairs:

The idea of the mind as a cool calculator that makes decisions by weighing the evidence bears no relation to how the brain actually works.  When political candidates assume voters dispassionately make decisions based on “the issues,” they lose.      .   .   .

In politics, when reason and emotion collide, emotion invariably wins. Elections are decided in the marketplace of emotions, a marketplace filled with values, images, analogies, moral sentiments, and moving oratory, in which logic plays only a supporting role.     .   .   .   The evidence is overwhelming that three things determine how people vote, in this order:  their feelings toward the parties and their principles, their feelings toward the candidates, and, if they haven’t decided by then, their feelings toward the candidates’ policy positions.

The people at Fox News have been operating from this premise for years.  On Fox, the news is presented from an emotional perspective (i.e.  fear and outrage about terrorism, indignation about government spending, patriotic devotion to whomever or whatever principle is singled out for such allegiance).  Opposition political candidates (Democrats) are usually portrayed as contemptible, flawed individuals.  As a result, Fox has enjoyed tremendous success at shaping public opinion and influencing the electorate.  Dr. Westen’s book appears likely to help one understand why.

The 2008 candidacy of Barack Obama presented a unique challenge to Fox News:  A Democrat finally had a campaign based on an emotional appeal, conveyed with the single word, “Hope”.  Despite the rational campaign strategy developed by Mark Penn for Hillary Clinton, (and continued by the McCain campaign) which posed the question:  “Who is Barack Obama?” – the voters followed their emotions and voted for “Hope”.

At this point in the Obama Presidency, people from across the political spectrum (especially the Left) are still pondering Mark Penn’s 2008 question:  “Who is Barack Obama?”  As I have frequently pointed out on this website, Obama has been repeatedly criticized (by his former supporters) as a cynical, narcissistic individual, who has carefully created a Rorschach-esqe public image, shaped by whatever characteristics the individual audience members would choose to project back onto their perception of the man himself.  Obama has been able to conceal his flexible, mercenary agenda behind the Rorschach screen and until recently, few have bothered to peek behind it.

David Sirota recently wrote an insightful essay about Obama which began with these words:

Barack Obama is a lot of things – eloquent, dissembling, conniving, intelligent and above all, calm.  But one thing he is not is weak.

I was particularly impressed by an essay about our President, written by the aforementioned Dr. Drew Westen, which appeared in The New York Times on August 6.  The article was entitled, “What Happened to Obama?” and it was absolutely magnificent.  Dr. Westen began by taking us back to January of 2009, when we were still in the depths of the financial crisis, shocked by the unemployment tsunami and looking to our new President for effective leadership through a gauntlet of bank bailout schemes and economic stimulus proposals.  Unfortunately, what America heard from Barack Obama during his Inaugural Address was a big nothing.  As Dr. Westen explained, the disappointment of Obama’s Inaugural Address was emblematic of the disappointment we experienced throughout the ensuing months:

The president is fond of referring to “the arc of history,” paraphrasing the Rev. Dr. Martin Luther King Jr.’s famous statement that “the arc of the moral universe is long, but it bends toward justice.”  But with his deep-seated aversion to conflict and his profound failure to understand bully dynamics – in which conciliation is always the wrong course of action, because bullies perceive it as weakness and just punch harder the next time – he has broken that arc and has likely bent it backward for at least a generation.

*   *   *

When Dr. King spoke of the great arc bending toward justice, he did not mean that we should wait for it to bend.

*   *   *

IN contrast, when faced with the greatest economic crisis, the greatest levels of economic inequality, and the greatest levels of corporate influence on politics since the Depression, Barack Obama stared into the eyes of history and chose to avert his gaze. Instead of indicting the people whose recklessness wrecked the economy, he put them in charge of it.  He never explained that decision to the public – a failure in storytelling as extraordinary as the failure in judgment behind it.  Had the president chosen to bend the arc of history, he would have told the public the story of the destruction wrought by the dismantling of the New Deal regulations that had protected them for more than half a century.  He would have offered them a counternarrative of how to fix the problem other than the politics of appeasement, one that emphasized creating economic demand and consumer confidence by putting consumers back to work.  He would have had to stare down those who had wrecked the economy, and he would have had to tolerate their hatred if not welcome it.  But the arc of his temperament just didn’t bend that far.

But why did Obama turn out to be such a disappointment?  Is he simply weak – or is Obama actually the inverse Franklin Delano Roosevelt described by David Sirota as “Bizarro FDR”?  From his unique perspective as a clinical psychologist, Dr. Westen is well-qualified to provide us with a valid opinion.  After first expressing the requisite ethical disclaimer (rarely heard from TV and radio “shrinks”) that he would “resist the temptation to diagnose at a distance”, Westen put on his “strategic consultant” hat to “venture some hypotheses”:

The most charitable explanation is that he and his advisers have succumbed to a view of electoral success to which many Democrats succumb – that “centrist” voters like “centrist” politicians.  Unfortunately, reality is more complicated.  Centrist voters prefer honest politicians who help them solve their problems.  A second possibility is that he is simply not up to the task by virtue of his lack of experience and a character defect that might not have been so debilitating at some other time in history. Those of us who were bewitched by his eloquence on the campaign trail chose to ignore some disquieting aspects of his biography:  that he had accomplished very little before he ran for president, having never run a business or a state; that he had a singularly unremarkable career as a law professor, publishing nothing in 12 years at the University of Chicago other than an autobiography; and that, before joining the United States Senate, he had voted “present” (instead of “yea” or “nay”) 130 times, sometimes dodging difficult issues.

A somewhat less charitable explanation is that we are a nation that is being held hostage not just by an extremist Republican Party but also by a president who either does not know what he believes or is willing to take whatever position he thinks will lead to his re-election.

*   *   *

Or perhaps, like so many politicians who come to Washington, he has already been consciously or unconsciously corrupted by a system that tests the souls even of people of tremendous integrity, by forcing them to dial for dollars – in the case of the modern presidency, for hundreds of millions of dollars.

With the passing of time, the likelihood that Barack Obama will be a single-term President increases dramatically because Americans are now scrutinizing him from a more judicious perspective.  Who will become the Independent candidate to return that forgotten emotion of hope to the disillusioned electorate?


 

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2010 Jackass Of The Year Award

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Once again, the moment has arrived for TheCenterLane.com to present its Jackass of The Year Award.  Our 2010 recipient is Alaska’s Senatorial candidate, Joe Miller.

Joe Miller’s campaign to defeat Senator Lisa Murkowski in Alaska’s 2010 Republican Primary got a big boost when Governor Sarah Palin decided to leave office to become a full-time celebrity.  Palin’s decision was immediately criticized by Senator Murkowski.  Palin responded to the criticism by endorsing Murkowski’s opponent in the Republican Primary:  Joe Miller.  Miller then won the support of the Tea Party Express, who – according to The Washington Post – spent more than $150,000 on pro-Miller television and radio ads during the week before the primary.  In addition to the mobilization of the Tea Party activists, Miller benefited from an initiative on the Alaska Republican Primary ballot requiring parental consent before a girl aged 17 or younger could receive an abortion.  Alaska’s most conservative voters were out in force on Primary Day.  The Washington Post article highlighted some of Miller’s positions that helped him curry favor with Alaska’s “hard right” voters:

He has called for phasing out Medicare and Social Security, as well as eliminating the Education Department because it is not mandated in the Constitution.

Never mind the fact that neither the FBI nor the Department of Homeland Security has been mandated by the Constitution.  The “lack of a Constitutional mandate” litmus test is only applied to those bureaucracies considered repugnant to Joe Miller.

Because the deadline for filing as an “Independent” candidate on Alaska’s November (general election) ballot had already expired by the August 24 primary, it was necessary for Lisa Murkowski to run as a “write-in” candidate in order to retain her Senate seat.

During the course of the ensuing campaign, Miller’s foolishness provided the news media with plenty of entertainment.  Despite Miller’s rhetoric, which called for limited government and fiscal restraint, Anne Applebaum of Slate recalled that Miller’s background became an issue in the campaign, since it was so inconsistent with that of a Tea Party hero:

During the course of the campaign, it also emerged that he had once collected farm subsidies; that his wife had once collected unemployment benefits; and that his family had received state health benefits.

Upon hearing that Murkowski would not abandon her quest to retain her Senate seat after her Republican Primary defeat, Mr. Miller immediately made a foolish statement, which he attempted to blame on an unidentified staffer.  Jim Carlton of the Washington Wire blog provided this quote of the now-infamous message sent out from Joe Miller’s Twitter account:

“What’s the difference between selling out your party’s values and the world’s oldest profession?” said the message under Mr. Miller’s Twitter address early Friday.

Mr. Miller said the tweet was sent by a staffer who was temporarily manning his account.  He added that the remark was aimed not at the senator herself, but at suggestions that Alaska’s Libertarian Party might allow Ms. Murkowski to run under its banner in November if she ends up losing to him in a final count of absentee ballots.

He blamed the tweet on “poor judgment” by the unidentified staffer, who he “relieved of his duties.”  He said he quickly removed the message from his Twitter feed.

If  Miller had not already done enough to alienate female voters — his Halloween-themed campaign ad, likening Lisa Murkowski to a witch, immediately drew the ire of the New Agenda website, which embedded a YouTube feed of the ad in this posting.

The most infamous event of Miller’s campaign occurred on October 17, when Tony Hopfinger, editor of the Alaska Dispatch website was handcuffed by Miller’s private security guards, when he attempted to interview the candidate at the conclusion of a “town hall” meeting at the Central Middle School in Anchorage.  The incident caused Miller to become the butt of many jokes on national television.

Hopfinger was attempting to question Miller about an incident that had become the subject of an e-mail that had originated a few days earlier from Mike Rostad, a Republican activist in Kodiak, Alaska, based on a discussion between Rostad and Miller’s father, Rex Miller.  The Anchorage Daily News provided this report:

Joe Miller was a part-time Fairbanks North Star Borough attorney in 2008 when he led an attempt to oust state Republican Party chief Randy Ruedrich.  Rostad wrote in the email that Rex Miller told him there was a poll being conducted during that effort against Ruedrich.  Rostad wrote that Rex Miller told him what happened:

“One noon hour, on his own time at the borough, Joe participated in an online poll voting against Randy.  He used four office computers in the office to do it, thinking this was his chance to boost numbers to get rid of Randy.  He emptied the cache files on the computers so the users wouldn’t know what he had done.  When the users asked what had happened to their caches, (Miller) admitted to what he did.  He was reprimanded and docked in pay for several days, but was not suspended or fired.

Miller’s improper computer use as a part-time attorney for the Fairbanks North Star Borough has been an ongoing controversy, which was the subject of this December 31 article from the Anchorage Daily News.

The handcuffing of Tony Hopfinger was not the only misstep by Joe Miller’s campaign on October 17.  Shira Toplitz of Politico reported on October 29 that the Murkowski campaign was running an ad, critical of two October 17 blunders:

The same night as the incident with the journalist, Miller told an audience that if “East Germany could, we could” secure the borders of the country — a controversial statement that Murkowski also uses in the new spot.

“Joe Miller’s answer to illegal immigration:  Use East Germany as an example,” continues the narrator.  “Exactly what kind of America does Joe Miller live in?  . . .”

Miller had nobody else to blame for his stupid remark exalting East Germany as a model for border security.

Once it became obvious that Lisa Murkowski made history as the first write-in candidate to win a Senate election since Strom Thurmond in 1954, Joe Miller took his battle to the courts.  He initially filed an action in Federal Court, although U.S. District Judge Ralph Beistline stayed proceedings pending resolution of the dispute in the State court, where the action should have been brought.  Once the case was filed in the State Court, Judge William Carey dismissed the suit and it was appealed directly to the Alaska Supreme Court.  U.S. News reported that when the ballots were still being counted, the Miller camp was determined to turn the election into a spelling bee:

Shortly after the second day of write-in ballot counting began on Thursday, a Miller observer challenged a vote for Murkowski that appeared to have her name spelled and printed correctly, though the “L” in “Lisa” was in cursive handwriting.  Later, at least 10 ballots in which Murkowski’s name appeared readable were challenged, including one in which the vote read:  “Lisa Murkowski Republican.”

Miller’s campaign said observers are simply challenging votes that don’t meet the strict letter of the law — including those with minor misspellings of Murkowski’s name or those with legibility or penmanship issues.

In addition to the “spelling bee” demand, Miller also attempted to pursue a claim of misconduct by election officials amounting to election fraud.  The Christian Science Monitor provided this report on Judge Carey’s dismissal of that count:

“Nowhere does Miller provide facts showing a genuine issue of fraud or election official misfeasance,” Carey wrote.  “Instead, the majority of the problematic statements included in the affidavits are inadmissible hearsay, speculation, and occasional complaints of sarcasm expressed by [elections] workers.  Nothing rises to the level showing genuine material facts of fraud.”

The stupidity of Miller’s “spelling bee” requirement became more apparent once the Alaska Supreme Court was asked to reverse the dismissal of that claim.  During oral arguments, Justice Dana Fabe directed a Why are you here? question to Miller’s attorneys.  Here’s how that moment was described by KTUU News:

With unofficial results showing Miller behind Murkowski by 10,328 votes, or 2,169 when ballots challenged by Miller observers are excluded, Justice Dana Fabe asked Miller’s legal team what — if any — impact the court’s decision would have on the outcome of the election.

“Even if you win on this argument and every one of the challenged ballots is set aside, it makes no difference in this count, and it makes no difference in the outcome of this election unless you win on one of your other counts — isn’t that correct?” Fabe said.

In other words:  even if the contested ballots were not counted in accordance with the guidelines advanced by Miller’s legal team – Miller still would have lost by over two thousand votes!

So seriously:  What was the point of filing suit?  Was Miller hoping to get some sort of deal from the Republican Party for conceding defeat?  His lawsuit was as idiotic as his entire campaign had been.  As late as December 27, Miller was vowing to continue his battle in the Federal Court to contest the election result.  Nevertheless, as Miller should have learned at Yale Law School, the pursuit of such a specious claim in a Federal Court, would likely result in rather expensive sanctions against Miller and his attorneys under Rule 11 of the Federal Rules of Civil Procedure, once his case was inevitably dismissed.  If that concern had not been enough to motivate Miller to abandon his Federal suit, it should have been enough to convince Miller’s attorneys that the game was finally over.  Miller ultimately conceded his defeat in the election on December 30, although he never made a concession call to Lisa Murkowski.  He explained that he had not made the call because he did not have Murkowski’s phone number.

Joe Miller may not have won the election to the United States Senate —  but he did win the 2010 Jackass of The Year Award from TheCenterLane.com.  Congratulations, Jackass!



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Senator Kaufman Will Be Missed

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Ted Kaufman filled Joe Biden’s seat representing the state of Delaware in the United States Senate on January 15, 2009, when Biden resigned to serve as Vice-President.  Kaufman’s 22-month term as Senator concluded on November 15, when Chris Coons was sworn in after defeating Christine O’Donnell in the 2010 election.

Senator Kaufman served as Chairman of the Congressional Oversight Panel – the entity created to monitor TARP on behalf of Congress.  The panel’s November Oversight Report was released at the COP website with an embedded, five-minute video of Senator Kaufman’s introduction to the Report.  At the DelawareOnline website, Nicole Gaudiano began her article about Kaufman’s term by pointing out that C-SPAN ranked Kaufman as the 10th-highest among Senators for the number of days (126) when he spoke on the Senate floor during the current Congressional session.  Senator Kaufman was a high-profile advocate of financial reform, who devoted a good deal of effort toward investigating the causes of the 2008 financial crisis.

On November 9, Senator Kaufman was interviewed by NPR’s Robert Siegel, who immediately focused on the fact that aside from the Securities and Exchange Commission’s civil suit against Goldman Sachs and the small fine levied against Goldman by FINRA, we have yet to see any criminal prosecutions arising from the fraud and other violations of federal law which caused the financial crisis.  Kaufman responded by asserting his belief that those prosecutions will eventually proceed, although “it takes a while” to investigate and prepare these very complex cases:

When you commit fraud on Wall Street or endanger it, you have good attorneys around you to kind of clean up after you.  So they clean up as they go.  And then when you actually go to trial, these are very, very, very complex cases.  But I still think we will have some good cases.  And I also think that if isn’t a deterrent, they will continue to do that.  And I think we have the people in place now at the Securities Exchange Commission and the Justice Department to hold them accountable.

We can only hope so   .  .  .

Back on March 17, I discussed a number of reactions to the recently-released Valukas Report on the demise of Lehman Brothers, which exposed the complete lack of oversight by the Federal Reserve Bank of New York — the entity with investigators in place inside of Lehman Brothers after the collapse of Bear Stearns.  The FRBNY had the perfect vantage point to conduct effective oversight of Lehman.  Not only did the FRBNY fail to do so — it actually helped Lehman maintain a false image of being financially solvent.  It is important to keep in mind that Lehman CEO Richard Fuld was a class B director of the FRBNY during this period.  Senator Kaufman’s reaction to the Valukas Report resulted in his widely-quoted March 15 speech from the Senate floor, in which he emphasized that the government needs to return the rule of law to Wall Street:

We all understood that to restore the public’s faith in our financial markets and the rule of law, we must identify, prosecute, and send to prison the participants in those markets who broke the law.  Their fraudulent conduct has severely damaged our economy, caused devastating and sustained harm to countless hard-working Americans, and contributed to the widespread view that Wall Street does not play by the same rules as Main Street.

*   *   *

Many have said we should not seek to “punish” anyone, as all of Wall Street was in a delirium of profit-making and almost no one foresaw the sub-prime crisis caused by the dramatic decline in housing values.  But this is not about retribution.  This is about addressing the continuum of behavior that took place — some of it fraudulent and illegal — and in the process addressing what Wall Street and the legal and regulatory system underlying its behavior have become.

As part of that effort, we must ensure that the legal system tackles financial crimes with the same gravity as other crimes.

The nagging suspicion that those nefarious activities at Lehman Brothers could be taking place “at other banks as well” became a key point in Senator Kaufman’s speech:

Mr. President, I’m concerned that the revelations about Lehman Brothers are just the tip of the iceberg.  We have no reason to believe that the conduct detailed last week is somehow isolated or unique.  Indeed, this sort of behavior is hardly novel.  Enron engaged in similar deceit with some of its assets.  And while we don’t have the benefit of an examiner’s report for other firms with a business model like Lehman’s, law enforcement authorities should be well on their way in conducting investigations of whether others used similar “accounting gimmicks” to hide dangerous risk from investors and the public.

Within a few months after that speech by Senator Kaufman, a weak financial reform bill was enacted to appease (or more importantly:  deceive) the outraged taxpayers.  Despite that legislative sham, polling results documented the increased public skepticism about the government’s ability or willingness to do right by the American public.

On October 20, Sam Gustin interviewed economist Joseph Stiglitz for the DailyFinance website.  Their discussion focused on the recent legislative attempt to address the causes of the financial crisis.  Professor Stiglitz emphasized the legal system’s inability to control that type of  sleazy behavior:

The corporations have the right to give campaign contributions.  So basically we have a system in which the corporate executives, the CEOs, are trying to make sure the legal system works not for the companies, not for the shareholders, not for the bondholders – but for themselves.

So it’s like theft, if you want to think about it that way.  These corporations are basically now working now for the CEOs and the executives and not for any of the other stakeholders in the corporation, let alone for our broader society.

You look at who won with the excessive risk-taking and shortsighted behavior of the banks.  It wasn’t the shareholder or the bondholders.  It certainly wasn’t American taxpayers.  It wasn’t American workers.  It wasn’t American homeowners.  It was the CEOs, the executives.

*   *   *

Economists focus on the whole notion of incentives.  People have an incentive sometimes to behave badly, because they can make more money if they can cheat.  If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.

And that’s why, for instance, in our antitrust law, we often don’t catch people when they behave badly, but when we do we say there are treble damages. You pay three times the amount of the damage that you do.  That’s a strong deterrent.

For now, there are no such deterrents for those CEOs who nearly collapsed the American economy and destroyed 15 million jobs.  Robert Scheer recently provided us with an update about what life is now like for Sandy Weill, the former CEO of Citigroup.  Scheer’s essay – entitled “The Man Who Shattered Our Economy” revealed that Weill just purchased a vineyard estate in Sonoma, California for a record $31 million.  That number should serve as a guidepost when considering the proposition expressed by Professor Stiglitz:

If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.

What are the chances of that happening?


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Two Years Too Late

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October 11, 2010

Greg Gordon recently wrote a fantastic article for the McClatchy Newspapers, in which he discussed how former Treasury Secretary Hank Paulson failed to take any action to curb risky mortgage lending.  It should come as no surprise that Paulson’s nonfeasance in this area worked to the benefit of Goldman Sachs, where Paulson had presided as CEO for the eight years prior to his taking office as Treasury Secretary on July 10, 2006.  Greg Gordon’s article provided an interesting timeline to illustrate Paulson’s role in facilitating the subprime mortgage crisis:

In his eight years as Goldman’s chief executive, Paulson had presided over the firm’s plunge into the business of buying up subprime mortgages to marginal borrowers and then repackaging them into securities, overseeing the firm’s huge positions in what became a fraud-infested market.

During Paulson’s first 15 months as the treasury secretary and chief presidential economic adviser, Goldman unloaded more than $30 billion in dicey residential mortgage securities to pension funds, foreign banks and other investors and became the only major Wall Street firm to dramatically cut its losses and exit the housing market safely.  Goldman also racked up billions of dollars in profits by secretly betting on a downturn in home mortgage securities.

By now, the rest of that painful story has become a burden for everyone in America and beyond.  Paulson tried to undo the damage to Goldman and the other insolvent, “too big to fail” banks at taxpayer expense with the TARP bailouts.  When President Obama assumed office in January of 2009, his first order of business was to ignore the advice of Adam Posen (“Temporary Nationalization Is Needed to Save the U.S. Banking System”) and Professor Matthew Richardson.  The consequences of Obama’s failure to put those “zombie banks” through temporary receivership were explained by Karen Maley of the Business Spectator website:

Ireland has at least faced up to the consequences of the reckless lending, unlike the United States.  The Obama administration has adopted a muddle-through approach, hoping that a recovery in housing prices might mean that the big US banks can avoid recognising crippling property losses.

*   *   *

Leading US bank analyst, Chris Whalen, co-founder of Institutional Risk Analytics, has warned that the banks are struggling to cope with the mountain of problem home loans and delinquent commercial property loans.  Whalen estimates that the big US banks have restructured less than a quarter of their delinquent commercial and residential real estate loans, and the backlog of problem loans is growing.

This is eroding bank profitability, because they are no longer collecting interest on a huge chunk of their loan book.  At the same time, they also face higher administration and legal costs as they deal with the problem property loans.

Banks nursing huge portfolios of problem loans become reluctant to make new loans, which chokes off economic activity.

Ultimately, Whalen warns, the US government will have to bow to the inevitable and restructure some of the major US banks.  At that point the US banking system will have to recognise hundreds of billions of dollars in losses from the deflation of the US mortgage bubble.

If Whalen is right, Ireland is a template of what lies ahead for the US.

Chris Whalen’s recent presentation, “Pictures of Deflation” is downright scary and I’m amazed that it has not been receiving the attention it deserves.  Surprisingly — and ironically – one of the only news sources discussing Whalen’s outlook has been that peerless font of stock market bullishness:  CNBC.   Whalen was interviewed on CNBC’s Fast Money program on October 8.  You can see the video here.  The Whalen interview begins at 7 minutes into the clip.  John Carney (formerly of The Business Insider website) now runs the NetNet blog for CNBC, which featured this interview by Lori Ann LoRocco with Chris Whalen and Jim Rickards, Senior Managing Director of Market Intelligence at Omnis, Inc.  Here are some tidbits from this must-read interview:

LL:  Chris, when are you expecting the storm to hit?

CW:  When the too big to fail banks can no longer fudge the cost of restructuring their real estate exposures, on and off balance sheet. Q3 earnings may be the catalyst

LL:  What banks are most exposed to this tsunami?

CW:  Bank of America, Wells Fargo, JPMorgan, Citigroup among the top four.  GMAC.  Why do we still refer to the ugly girls — Bank of America, JPMorgan and Wells Fargo in particular — as zombies?  Because the avalanche of foreclosures and claims against the too-big-too-fail banks has not even crested.

*   *   *

LL:  How many banks to expect to fail next year because of this?

CW:  The better question is how we will deal with the process of restructuring.  My view is that the government/FDIC can act as receiver in a government led restructuring of top-four banks.  It is time for PIMCO, BlackRock and their bond holder clients to contribute to the restructuring process.

Of course, this restructuring could have and should have been done two years earlier — in February of 2009.  Once the dust settles, you can be sure that someone will calculate the cost of kicking this can down the road — especially if it involves another round of bank bailouts.  As the saying goes:  “He who hesitates is lost.”  In this case, President Obama hesitated and we lost.  We lost big.



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We Took The Wrong Turn

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October 7, 2010

The ugly truth has raised its head once again.  We did it wrong and Australia did it right.  It was just over a year ago – on September 21, 2009 – when I wrote a piece entitled, “The Broken Promise”.  I concluded that posting with this statement:

If only Mr. Obama had stuck with his campaign promise of “no more trickle-down economics”, we wouldn’t have so many people wishing they lived in Australia.

I focused that piece on a fantastic report by Australian economist Steve Keen, who explained how the “money multiplier” myth, fed to Obama by the very people who caused the financial crisis, was the wrong paradigm to be starting from in attempting to save the economy.

The trouble began immediately after President Obama assumed office.  I wasn’t the only one pulling out my hair in February of 2009, when our new President decided to follow the advice of Larry Summers and “Turbo” Tim Geithner.  That decision resulted in a breach of Obama’s now-infamous campaign promise of “no more trickle-down economics”.  Obama decided to do more for the zombie banks of Wall Street and less for Main Street – by sparing the banks from temporary receivership (also referred to as “temporary nationalization”) while spending less on financial stimulus.  Obama ignored the 50 economists surveyed by Bloomberg News, who warned that an $800 billion stimulus package would be inadequate.  At the Calculated Risk website, Bill McBride lamented Obama’s strident posturing in an interview conducted by Terry Moran of ABC News, when the President actually laughed off the idea of implementing the so-called “Swedish solution” of putting those insolvent banks through temporary receivership.

With the passing of time, it has become painfully obvious that President Obama took the country down the wrong path.  The Australian professor (Steve Keen) was right and Team Obama was wrong.  Economist Joseph Stiglitz made this observation on August 5, 2010:

Kevin Rudd, who was prime minister when the crisis struck, put in place one of the best-designed Keynesian stimulus packages of any country in the world.  He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon.  So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place.

Rudd’s stimulus worked:  Australia had the shortest and shallowest of recessions of the advanced industrial countries.

Fast-forward to October 6, 2010.  Michael Heath of Bloomberg BusinessWeek provided the latest chapter in the story of how America did it wrong while Australia did it right:

Australian Employers Added 49,500 Jobs in September

Australian employers in September added the most workers in eight months, driving the country’s currency toward a record and bolstering the case for the central bank to resume raising interest rates.

The number of people employed rose 49,500 from August, the seventh straight gain, the statistics bureau said in Sydney today.  The figure was more than double the median estimate of a 20,000 increase in a Bloomberg News survey of 25 economists.  The jobless rate held at 5.1 percent.

Meanwhile — back in the States — on October 6, ADP released its National Employment Report for September, 2010.  It should come as no surprise that our fate is 180 degrees away from that of Australia:  Private sector employment in the U.S. decreased by 39,000 from August to September on a seasonally adjusted basis, according to the ADP report.   Beyond that, October 6 brought us a gloomy forecast from Jan Hatzius, chief U.S. economist for the ever-popular Goldman Sachs Group.  Wes Goodman of Bloomberg News quoted Hatzius as predicting that the United States’ economy will be “fairly bad” or “very bad” over the next six to nine months:

“We see two main scenarios,” analysts led by Jan Hatzius, the New York-based chief U.S. economist at the company, wrote in an e-mail to clients.  “A fairly bad one in which the economy grows at a 1 1/2 percent to 2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession.”

Aren’t we lucky!  How wise of President Obama to rely on Larry Summers to the exclusion of most other economists!

Charles Ferguson, director of the new documentary film, Inside Job, recently offered this analysis of the milieu that facilitated the opportunity for Larry Summers to inflict his painful legacy upon us:

Then, after the 2008 financial crisis and its consequent recession, Summers was placed in charge of coordinating U.S. economic policy, deftly marginalizing others who challenged him.  Under the stewardship of Summers, Geithner, and Bernanke, the Obama administration adopted policies as favorable toward the financial sector as those of the Clinton and Bush administrations — quite a feat.  Never once has Summers publicly apologized or admitted any responsibility for causing the crisis.  And now Harvard is welcoming him back.

Summers is unique but not alone.  By now we are all familiar with the role of lobbying and campaign contributions, and with the revolving door between industry and government.  What few Americans realize is that the revolving door is now a three-way intersection.  Summers’ career is the result of an extraordinary and underappreciated scandal in American society:  the convergence of academic economics, Wall Street, and political power.

*     *     *

Now, however, as the national recovery is faltering, Summers is being eased out while Harvard is welcoming him back.  How will the academic world receive him?  The simple answer:  Better than he deserves.

Australia is looking better than ever  —  especially when you consider that their spring season is just beginning right now     .   .   .




Party Out Of Bounds

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October 4, 2010

It’s refreshing to witness the expansion in the number of people looking forward to the demise of our two-party political system.  Tom Friedman of The New York Times recently gushed with enthusiasm about the idea of  “a serious third party”, capable of rising to the challenge of enacting important, urgently-needed legislation without offending the far left, the far right or “coal state Democrats”.  Friedman is only half-right.  We need a third, a fourth, a fifth and a sixth party, as well.  Placing all of one’s hope in THE Third Party is a formula for more disappointment.

I frequently complain that we no longer have two distinct political parties running America.  We are currently stuck under the regime of the Republi-cratic Corporatist Party.  The widely-expressed disappointment resulting from President Obama’s failure to keep his campaign promises was discussed in my previous four postings.

Salena Zito of the Pittsburgh Tribune-Review wrote a great article about her year of traveling 6,609 miles to interview 432 people identifying themselves as Democrats.  Here’s what she learned:

In coffee shops, on streetcorners and farms, at factories, the narrative was always the same:  How could such great promise have let the country down so much, so quickly?

Ms. Zito reached the conclusion that the man elected President by these voters was really no improvement from the 2004 candidate, John Kerry:

Obama is no less out of touch than the Kerry whom America watched windsurf  before the 2004 election — the same man who said last week that one reason Democrats will lose this year is that “we have an electorate that doesn’t always pay that much attention to what’s going on, so people are influenced by a simple slogan rather than the facts or the truth or what’s happening.”

Here’s where Kerry and Obama are both wrong:  The electorate that was influenced by a simple slogan – “Yes, we can” — in 2008 actually is very well-informed.

This time, that electorate isn’t voting for a dream, but for its pocketbook.

Throughout the current election cycle, the Democratic establishment has avoided the sort of challenge experienced by the Republican establishment in the form of the Tea Party movement.  That will change after November 2, at which point disgruntled Democrats will feel more comfortable jumping ship.  It took consecutive humiliations at the polls in 2006 and 2008 before the Tea Partiers were motivated to break ranks with the Republican powers that be and undertake campaigns to challenge Republican incumbents.  Their efforts paid off so well, many Tea Partiers have become enthused about having a distinct party from the Republican organization.  After the 2010 elections are concluded, we can expect to see splinter groups breaking away from the Democratic Party.

Back on April 22, Mark Willen, Senior Political Editor of The Kiplinger Letter, wrote an interesting piece, lamenting the disadvantage experienced by moderate candidates because the political primary process facilitates victory for the choices of extremist voters as a result of the enthusiasm gap.  (Extremists are more motivated to vote in primaries than moderate voters, who don’t consider themselves crusaders for a particular agenda.)  Willen sees the two parties being pushed to ideological extremes, despite the fact that most Americans consider themselves to be in the center of the political spectrum.  Another important point from that piece concerns the fact that info-tainment programs presenting extremist views get better ratings than programs featuring commentary that really is “fair and balanced”.  As a result, cable television audiences are regularly exposed to a bombardment of caustic rhetoric.

The 2012 elections could bring us a significant increase in the number of  “independent” candidates, as well as nominees from new political parties.  A change of that nature could close future mid-term enthusiasm gaps, occurring in the November elections (such as the one expected for this year).  The prospects for a larger, more diverse group of political parties are looking better with each passing day.



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Fighting The Old War

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September 30, 2010

The New York Times recently ran a story about Mayor Michael Bloomberg’s efforts to support the campaigns of centrist Republicans out of concern that the election of “Tea Party” –  backed candidates was pushing the Republican Party to the extreme right.  The article by Michael Barbaro began this way:

In an election year when anger and mistrust have upended races across the country, toppling moderates and elevating white-hot partisans, Mayor Michael R. Bloomberg is trying to pull politics back to the middle, injecting himself into marquee contests and helping candidates fend off the Tea Party.

Although it’s nice to see Mayor Bloomberg take a stand in support of centrism, I believe he is going about it the wrong way.  There are almost as many different motives driving people to the Tea Party movement as there are attendees at any given Tea Party event.  Although the movement is usually described as a far-right-wing fringe phenomenon, reporters who have attended the rallies and talked to the people found a more diverse group.  Consider the observations made by True Slant’s David Masciotra, who attended a Tea Party rally in Valparaiso, Indiana back on April 14:

The populist anger of the Northwest Indiana tea partiers could be moved to a left-wing protest rally without much discernible difference.

As much as the NWI Patriots seemed to hate Obama and health care reform, they also hate large corporations and the favorable treatment they are given by Washington.

*   *   *

They have largely legitimate concerns and grievances about the quality of their lives and future of their children’s lives that are not being addressed in Washington by either party.  Their wages have stagnated, while the cost of raising a family has crushingly increased.

My pet theory is that the rise of the Tea Party movement is just the first signal indicating the demise of the so-called “two-party system”.  I expect this to happen as voters begin to face up to the fact that the differences between Democratic and Republican policies are subtle when compared to the parties’ united front with lobbyists and corporations in trampling the interests of individual citizens.  On July 26, I wrote a piece entitled, “The War On YOU”, discussing the battle waged by “our one-party system, controlled by the Republi-cratic Corporatist Party”.   On August 30, I made note of a recent essay at the Zero Hedge website, written by Michael Krieger of KAM LP.  One of Krieger’s points, which resonated with me, was the idea that whether you have a Democratic administration or a Republican administration, both parties are beholden to the financial elites, so there’s not much room for any “change you can believe in”:

.   .  .   the election of Obama has proven to everyone watching with an unbiased eye that no matter who the President is they continue to prop up an elite at the top that has been running things into the ground for years.  The appointment of Larry Summers and Tiny Turbo-Tax Timmy Geithner provided the most obvious sign that something was seriously not kosher.  Then there was the reappointment of Ben Bernanke.  While the Republicans like to simplify him as merely a socialist he represents something far worse.

Barry Ritholtz, publisher of The Big Picture website, recently wrote a piece focused on how the old Left vs. Right paradigm has become obsolete.  He explained that the current power struggle taking place in Washington (and everywhere else) is the battle of corporations against individuals:

We now live in an era defined by increasing Corporate influence and authority over the individual.  These two “interest groups” – I can barely suppress snorting derisively over that phrase – have been on a headlong collision course for decades, which came to a head with the financial collapse and bailouts.  Where there are massive concentrations of wealth and influence, there will be abuse of power.  The Individual has been supplanted in the political process nearly entirely by corporate money, legislative influence, campaign contributions, even free speech rights.

*   *   *

For those of you who are stuck in the old Left/Right debate, you are missing the bigger picture.  Consider this about the Bailouts:  It was a right-winger who bailed out all of the big banks, Fannie Mae, and AIG in the first place; then his left winger successor continued to pour more money into the fire pit.

What difference did the Left/Right dynamic make?   Almost none whatsoever.

*   *   *

There is some pushback already taking place against the concentration of corporate power:  Mainstream corporate media has been increasingly replaced with user created content – YouTube and Blogs are increasingly important to news consumers (especially younger users).  Independent voters are an increasingly larger share of the US electorate. And I suspect that much of the pushback against the Elizabeth Warren’s concept of a Financial Consumer Protection Agency plays directly into this Corporate vs. Individual fight.

But the battle lines between the two groups have barely been drawn.  I expect this fight will define American politics over the next decade.

Keynes vs Hayek?  Friedman vs Krugman?  Those are the wrong intellectual debates.  It’s you vs. Tony Hayward, BP CEO,  You vs. Lloyd Blankfein, Goldman Sachs CEO.   And you are losing    . . .

Barry Ritholtz concluded with the statement:

If you see the world in terms of Left & Right, you really aren’t seeing the world at all  . . .

I couldn’t agree more.  Beyond that, I believe that politicians who continue to champion the old Left vs. Right war will find themselves in the dust as those leaders representing the interests of human citizens  rather than corporate interests win the support and enthusiasm of the electorate.   Similarly, those news and commentary outlets failing to adapt to this changing milieu will no longer have a significant following.  It will be interesting to see who adjusts. 




Where Obama Went Wrong

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September 27, 2010

One could write an 800-page book on this subject.  During the past week, we’ve been bombarded with explanations from across the political spectrum, concerning how President Obama has gone from wildly-popular cult hero to radioactive force on the 2010 campaign trail.  For many Democrats facing re-election bids in November, the presence of Obama at one of their campaign rallies could be reminiscent of the appearance of William Macy’s character from the movie, The Cooler.  Wikipedia’s discussion of the film provided this definition:

In gambling parlance, a “cooler” is an unlucky individual whose presence at the tables results in a streak of bad luck for the other players.

Barack Obama was elected on a wave of emotion, under the banners of  “Hope” and “Change”.  These days, the emotion consensus has turned against Obama as voters feel more hopeless as a result of Obama’s failure to change anything.  His ardent supporters feel as though they have been duped.  Instead of having been tricked into voting for a “secret Muslim”, they feel they have elected a “secret Republican”.  At the Salon.com website, Glenn Greenwald has documented no less than fifteen examples of Obama’s continuation of the policies of George W. Bush, in breach of his own campaign promises.

One key area of well-deserved outrage against President Obama’s performance concerns the economy.  The disappointment about this issue was widely articulated in December of 2009, as I pointed out here.  At that time, Matt Taibbi had written an essay for Rolling Stone entitled, “Obama’s Big Sellout”, which inspired such commentators as Edward Harrison of Credit Writedowns to write this and this.  Beyond the justified criticism, polling by Pew Research has revealed that 46% of Democrats and 50% of Republicans incorrectly believe that the TARP bank bailout was signed into law by Barack Obama rather than George W. Bush.  President Obama invited this confusion with his nomination of “Turbo” Tim Geithner to the position of Treasury Secretary.  As President of the Federal Reserve of New York, Geithner oversaw the $13 billion gift Goldman Sachs received by way of Maiden Lane III.

The emotional battleground of the 2010 elections provided some fun for conservative pundit, Peggy Noonan this week as a result of the highly-publicized moment at the CNBC town hall meeting on September 20.  Velma Hart’s question to the President was emblematic of the plight experienced by many 2008 Obama supporters.  Noonan’s article, “The Enraged vs. The Exhausted” characterized the 2010 elections as a battle between those two emotional factions.  The “Velma Moment” exposed Obama’s political vulnerability as an aloof leader, lacking the ability to emotionally connect with his supporters:

The president looked relieved when she stood.  Perhaps he thought she might lob a sympathetic question that would allow him to hit a reply out of the park.  Instead, and in the nicest possible way, Velma Hart lobbed a hand grenade.

“I’m a mother. I’m a wife.  I’m an American veteran, and I’m one of your middle-class Americans.  And quite frankly I’m exhausted.  I’m exhausted of defending you, defending your administration, defending the mantle of change that I voted for, and deeply disappointed with where we are.”  She said, “The financial recession has taken an enormous toll on my family.”  She said, “My husband and I have joked for years that we thought we were well beyond the hot-dogs-and-beans era of our lives.  But, quite frankly, it is starting to knock on our door and ring true that that might be where we are headed.”

What a testimony.  And this is the president’s base.  He got that look public figures adopt when they know they just took one right in the chops on national TV and cannot show their dismay.  He could have responded with an engagement and conviction equal to the moment.  But this was our president  — calm, detached, even-keeled to the point of insensate.  He offered a recital of his administration’s achievements: tuition assistance, health care.  It seemed so off point.  Like his first two years.

Kirsten Powers of The Daily Beast provided the best analysis of how the “Velma Moment” illustrated Obama’s lack of empathy.  Where Bill Clinton is The Sorcerer, Barack Obama is The Apprentice:

Does Barack Obama suffer from an “empathy deficit?” Ironically, it was Obama who used the phrase in a 2008 speech when he diagnosed the United States as suffering from the disorder.  In a plea for unity, candidate Obama said lack of empathy was “the essential deficit that exists in this country.”  He defined it as “an inability to recognize ourselves in one another; to understand that we are our brother’s keeper; we are our sister’s keeper; that, in the words of Dr. King, we are all tied together in a single garment of destiny.”

*   *   *

And at a 2008 rally in Westerville, Ohio, Obama said, “One of the values that I think men in particular have to pass on is the value of empathy.  Not sympathy, empathy.  And what that means is standing in somebody else’s shoes, being able to look through their eyes.  You know, sometimes we get so caught up in ‘us’ that it’s hard to see that there are other people and that your behavior has an impact on them.”

Yes, President Obama, sometimes that does happen.  Take a look in the mirror.  Nothing brought this problem into relief like the two Obama supporters who confronted the president at a recent town hall meeting expressing total despair over their economic situation and hopelessness about the future.  Rather than expressing empathy, Obama seemed annoyed and proceeded with one of his unhelpful lectures.

*   *   *

One former Emoter-in-Chief, Bill Clinton, told Politico last week, “[Obama’s] being criticized for being too disengaged, for not caring.  So he needs to turn into it.  I may be one of the few people that think it’s not bad that that lady said she was getting tired of defending him.  He needs to hear it.  You need to hear. Embrace people’s anger, including their disappointment at you.  And just ask ‘em to not let the anger cloud their judgment.  Let it concentrate their judgment.  And then make your case.”

Then the kicker:  “[Obama has] got to realize that, in the end, it’s not about him. It’s about the American people, and they’re hurting.”

The American people are hurting because their President sold them out immediately after he was elected.  When faced with the choice of bailing out the zombie banks or putting those banks through temporary receivership (the “Swedish approach” – wherein the bank shareholders and bondholders would take financial “haircuts”) Obama chose to bail out the banks at taxpayer expense.  So here we are  . . .  in a Japanese-style “lost decade”.  In case you don’t remember the debate from early 2009 – peruse this February 10, 2009 posting from the Calculated Risk website.  After reading that, try not to cry after looking at this recent piece by Barry Ritholtz of The Big Picture entitled, “We Should Have Gone Swedish  . . .” :

The result of the Swedish method?  They spent 4% of GDP ($18.3 billion in today’s dollars), to rescue their banks.  That is far less than the $trillions we have spent — somewhere between 15-20% of GDP.

Final cost to the Swedes?  Less than 2% of G.D.P.  (Some officials believe it was closer to zero, depending on how certain rates of return are calculated).

In the US, the final tally is years away from being calculated — and its likely to be many times what Sweden paid in GDP % terms.

It has become apparent that the story of  “Where Obama Went Wrong” began during the first month of his Presidency.  Whoever undertakes the task of writing that book will be busy for a long time.




A Shocking Decision

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September 23, 2010

Nobody seems too surprised about the resignation of Larry Summers from his position as Director of the National Economic Council.  Although each commentator seems to have a unique theory for Summers’ departure, the event is unanimously described as “expected”.

When Peter Orszag resigned from his post as Director of the Office of Management and Budget, the gossip mill focused on his rather complicated love life.  According to The New York Post, the nerdy-looking number cruncher announced his engagement to Bianna Golodryga of ABC News just six weeks after his ex-girlfriend, shipping heiress Claire Milonas, gave birth to their love child, Tatiana.  That news was so surprising, few publications could resist having some fun with it.  Politics Daily ran a story entitled, “Peter Orszag:  Good with Budgets, Good with Babes”.  Mark Leibovich of The New York Times pointed out that the event “gave birth” to a fan blog called Orszagasm.com.  Mr. Leibovich posed a rhetorical question at the end of the piece that was apparently answered with Orszag’s resignation:

This goes to another obvious — and recurring — question:  whether someone whose personal life has become so complicated is really fit to tackle one of the most demanding, important and stressful jobs in the universe. “Frankly I don’t see how Orszag can balance three families and the national budget,” wrote Joel Achenbach of The Washington Post.

The shocking nature of the Orszag love triangle was dwarfed by President Obama’s nomination of Orszag’s replacement:  Jacob “Jack” Lew.  Lew is a retread from the Clinton administration, at which point (May 1998 – January 2001) he held that same position:  OMB Director.  That crucial time frame brought us two important laws that deregulated the financial industry:  the Financial Services Modernization Act of 1999 (which legalized proprietary trading by the Wall Street banks) and the Commodity Futures Modernization Act of 2000, which completely deregulated derivatives trading, eventually giving rise to such “financial weapons of mass destruction” as naked credit default swaps.  Accordingly, it should come as no surprise that Lew does not believe that deregulation of the financial industry was a proximate cause of  the 2008 financial crisis.  Lew’s testimony at his September 16 confirmation hearing before the Senate Budget Committee was discussed by Shahien Nasiripour  of The Huffington Post:

Lew, a former OMB chief for President Bill Clinton, told the panel that “the problems in the financial industry preceded deregulation,” and after discussing those issues, added that he didn’t “personally know the extent to which deregulation drove it, but I don’t believe that deregulation was the proximate cause.”

Experts and policymakers, including U.S. Senators, commissioners at the Securities and Exchange Commission, top leaders in Congress, former financial regulators and even Obama himself have pointed to the deregulatory zeal of the Clinton and George W. Bush administrations as a major cause of the worst financial crisis since the Great Depression.

During 2009, Lew was working for Citigroup, a TARP beneficiary.  Between the TARP bailout and the Federal Reserve’s purchase of mortgage-backed securities from that zombie bank, Citi was able to give Mr. Lew a fat bonus of $950,000 – in addition to the other millions he made there from 2006 until January of 2009 (at which point Hillary Clinton found a place for him in her State Department).

The sabotage capabilities Lew will enjoy as OMB Director become apparent when revisiting my June 28 piece, “Financial Reform Bill Exposed As Hoax”:

Another victory for the lobbyists came in their sabotage of the prohibition on proprietary trading (when banks trade with their own money, for their own benefit).  The bill provides that federal financial regulators shall study the measure, then issue rules implementing it, based on the results of that study.  The rules might ultimately ban proprietary trading or they may allow for what Jim Jubak of MSN calls the “de minimus” (trading with minimal amounts) exemption to the ban.  Jubak considers the use of the de minimus exemption to the so-called ban as the likely outcome.  Many commentators failed to realize how the lobbyists worked their magic here, reporting that the prop trading ban (referred to as the “Volcker rule”) survived reconciliation intact.  Jim Jubak exposed the strategy employed by the lobbyists:

But lobbying Congress is only part of the game.  Congress writes the laws, but it leaves it up to regulators to write the rules.  In a mid-June review of the text of the financial-reform legislation, the Chamber of Commerce counted 399 rule-makings and 47 studies required by lawmakers.

Each one of these, like the proposed de minimus exemption of the Volcker rule, would be settled by regulators operating by and large out of the public eye and with minimal public input.  But the financial-industry lobbyists who once worked at the Federal Reserve, the Treasury, the Securities and Exchange Commission, the Commodities Futures Trading Commission or the Federal Deposit Insurance Corp. know how to put in a word with those writing the rules.  Need help understanding a complex issue?  A regulator has the name of a former colleague now working as a lobbyist in an e-mail address book.  Want to share an industry point of view with a rule-maker?  Odds are a lobbyist knows whom to call to get a few minutes of face time.

You have one guess as to what agency will be authorized to make sure those new rules comport with the intent of the financial “reform” bill   .   .   .   Yep:  the OMB (see OIRA).

President Obama’s nomination of Jacob Lew is just the latest example of a decision-making process that seems incomprehensible to his former supporters as well as his critics.  Yves Smith of Naked Capitalism refuses to let Obama’s antics go unnoticed:

The Obama Administration, again and again, has taken the side of the financial services industry, with the occasional sops to unhappy taxpayers and some infrequent scolding of the industry to improve the optics.

Ms. Smith has developed some keen insight about the leadership style of our President:

The last thing Obama, who has been astonishingly accommodating to corporate interests, needs to do is signal weakness.  But he has made the cardinal mistake of trying to please everyone and has succeeded in having no one happy with his policies.  Past Presidents whose policies rankled special interests, such as Roosevelt, Johnson, and Reagan, were tenacious and not ruffled by noise.  Obama, by contrast, announces bold-sounding initiatives, and any real change will break eggs and alienate some parties, then retreats.  So he creates opponents, yet fails to deliver for his allies.

Yes, the Disappointer-In-Chief has failed to deliver for his allies once again – reinforcing my belief that he has no intention of running for a second term.




Disappointer-In-Chief Keeps On Disappointing

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September 20, 2010

Many prognosticators have voiced their expectations that disappointment in the Obama Presidency will destroy the campaigns of Democratic candidates in the 2010 elections.  The rationale is that disappointed former supporters of Obama will be feeling too apathetic to vote in November, while the energized supporters of Tea Party candidates will turn out in huge numbers.  Beyond that, many pundits believe that Obama is actually having a “radioactive” effect on those campaigns where he intercedes.  Discussions of this subject eventually result in speculation that President Obama will not seek a second term.  After all …  he couldn’t possibly intend on running for re-election after what he has done to his supporters.  Consider the way Mr. Obama speaks about his supporters and there are only two explanations.  The first explanation is based on the theory that Obama is arrogant and unconcerned – taking his constituency for granted.  The second theory is that he is unconcerned about what his supporters think of his performance because he has no intention of seeking a second term.

President Obama recently spoke at a $30,000-per-plate fundraising event for the Democratic National Committee at the home of Richard and Ellen Richman.  (Think about that name for a second:  Rich Richman.)  Mr. Richman lives up to his surname and resides in the impressive Conyers Farm development in Greenwich, Connecticut.  Christopher Keating of the Capitolwatch blog at courant.com provided us with the President’s remarks, addressed to the well-heeled attendees:

.   .   .   Democrats, just congenitally, tend to get — to see the glass as half empty.   (Laughter.)  If we get an historic health care bill passed — oh, well, the public option wasn’t there.  If you get the financial reform bill passed — then, well, I don’t know about this particularly derivatives rule, I’m not sure that I’m satisfied with that.  And gosh, we haven’t yet brought about world peace and — (laughter.)  I thought that was going to happen quicker.  (Laughter.) You know who you are.  (Laughter.)

The tactlessness of those remarks was not lost on Glenn Greenwald of Salon.com.  Mr. Greenwald transcended the perspective of an offended liberal to question what could possibly have been going on in the mind of the speaker:

What’s most striking about Obama’s comments is that there is no acceptance whatsoever of responsibility (I’ve failed in some critical areas; we could have/should have done better).  There’s not even any base-motivating vow to fight to fix these particular failures (we’ll keep fighting for a public option/to curb executive power abuses/to reduce lobbyist and corporate control of our political process).  Instead, he wants you to know that if you criticize him — or even question what he’s done (“well, I don’t know about this particular derivatives rule, I’m not sure that I’m satisfied with that”) – it’s your fault:  for being some sort of naive, fringe-leftist idiot who thought he would eliminate the Pentagon and bring about world peace in 18 months, and/or because you simply don’t sufficiently appreciate everything he’s done for you because you’re congenitally dissatisfied.

*    *    *

Sitting at a $30,000 per plate fundraising dinner and mocking liberal critics as irrational ingrates while wealthy Party donors laugh probably does wonders for bruised presidential egos, but it doesn’t seem to be a particularly effective way to motivate those who are so unmotivated.  Then again, Barack Obama isn’t actually up for election in November, so perhaps the former goal is more important to him than the latter.  It certainly seems that way from these comments.

Of course, liberals weren’t the only Obama supporters who felt betrayed by the President’s abandonment of his campaign promises.  In fact, Obama owed his 2008 victory to those independent voters who drank the “Hope and Change” Kool-Aid.

Glenn Greenwald devoted some space from his Salon piece to illustrate how President Obama seems to be continuing the agenda of President Bush.  I was reminded of the quote from former Attorney General John Ashcroft in an article written by Jane Mayer for The New Yorker.  When discussing how he expected the Obama Presidency would differ from the Presidency of his former boss, George W. Bush, Ashcroft said:

“How will he be different?  The main difference is going to be that he spells his name ‘O-b-a-m-a,’ not ‘B-u-s-h.’ ”

One important difference that Ashcroft failed to anticipate was that Bush knew better than to disparage his own base.  The likely reason for this distinction could have been Bush’s intention to run for a second term.



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